Riyadh, Dubai, Nairobi among top 20 ‘most dynamic cities’

Insights MENA

Economic Outlook

Cities in the Middle East and Africa (MEA) are gaining momentum, with Dubai (14th), Riyadh (18th) and Nairobi (4th) all ranked within the top 20, according to JLL’s City Momentum Index 2020 which identifies the world’s most dynamic cities from a real estate perspective. The annual Index combines socio-economic and commercial property metrics providing insights into 130 major established and emerging business hubs across the globe.

Small businesses constitute 97.6% of the Saudi private sector entities, according to the Saudi Ministry of Labor and Social Development. Meanwhile, the number of medium-sized enterprises in Saudi Arabia reached 2% of the total private sector working entities.

One of the foremost development plans in Saudi Arabia is to increase women’s participation in the labor market. With new reforms being undertaken in Riyadh, the capital is attracting a large number of single women seeking employment opportunities.

Egyptian hotels in Cairo, Alexandria, Sharm El Sheikh and Hurghada will see their average revenue per available room (RevPAR) increase by 5 to 13% in 2020, according to a Colliers International report. Sharm El Sheikh will see the highest increase at 13%, Hurghada at 11%, Alexandria at 9%, and Cairo at 5%. The current highest RevPAR is in Cairo at 126 USD, while the lowest is in Sharm at 54 USD.

Egypt economic growth will accelerate to 5.8% in 2019/2020 compared to 5.6% in 2018/2019, according to Reuters. This prediction is in line with Egypt Ministry of Finance recently-update growth expectations of 5.8 and 5.9%.

The Egyptian banking system will remain stable over the next 12-18 months amid high liquidity rates and strong economic growth that will raise demand for credit. Lower interest rates and state funding initiatives for the industrial, tourism and mortgage sectors will improve fuel credit growth of 12-15%, boosting profitability in the sector.

Oman will impose 5% value-added tax (VAT) from early 2021, according to Ali bin Masoud Al Sunaidy, Minister of Commerce and Industry. Currently, three GCC countries, UAE, Saudi Arabia and Bahrain, have levied VAT as agreed by the six member countries. Oman will most likely be the next GCC country to join the league.

UAE has announced the signing of a strategic partnership agreement with the World Economic Forum (WEF) for the next five years aiming to unify their visions and objectives of cooperation in several fields and projects at the global level.

UAE has posted a 66.32 BN AED (18.06 BN USD) surplus for the first nine months of 2019. The surplus was 0.04% higher than in 2018, when the country posted a 66 BN AED (17.96 BN USD) surplus for the same period.

Political Events

Egypt and Morocco are seeing “promising changes” that should help improve the overall picture for MENA countries’ economic competitiveness. The two North African countries enjoy proximity to the EU and wage levels that are 20 to 50% of central European levels and 7 to 17% of France level, which lend further support to FDI flow.

Saudi Arabia has lifted a ban on livestock imports from Sudan, according to the Ministry of Environment, Water and Agriculture of Saudi Arabia. The decision was taken after a reappraisal of the epidemiological situation of livestock in Sudan verified that farmed animals in the country were disease-free.

Stock Market

High net-worth individuals and institutional investors can now invest smaller amounts in the private component of IPOs and stake sales under amendments to EGX listing regulations issued by the Financial Regulatory Authority (FRA). The changes remove 1 MM EGP minimum stake purchase value for the former group and 10 MM EGP for the latter.

The Saudi Arabian Oil Company (Saudi Aramco) has reportedly sold a liquefied natural gas (LNG) cargo to South Korea’s S-Oil Corporation, through its trading arm Aramco Trading Company. The cargo was sold at around 40-4.60 USD per million British thermal units (mmBtu) and will be delivered early March. Aramco recently agreed to supply LNG to Bangladesh as part of a 3 BN USD deal.

Note: Weekly values are calculated on Thursday of each week.

Companies Transactions

First Abu Dhabi Bank (FAB) is in talks to acquire Bank Audi’s Egypt unit. The bank stated that a “working group” had been set up to evaluate the acquisition and that an agreement is in line with its growth strategy, but stressed that “no valuations have been announced and there is no certainty that these discussions will result in a transaction.”

A total of 12 domestic and international investors are looking to acquire a non-controlling majority stake in Raya subsidiary Aman Holding. The company has 375 MM EGP (23.7 MM USD) in capital and holds 99% stakes in the former two businesses and a 74.5% stake in the latter.

Cairo for Investment and Real Estate Development (CIRA) and Germany Saxony International School are in talks to set up an unspecified number of German schools in 6thof October City. Saxony will own 20% of a planned JV, confirming that the foreign ownership will be within the limits imposed last year by the government.

The Middle East Oil Refinery (Midor) has secured a 300 MM USD medium-term syndicated loan from Commercial International Bank (CIB) and Al Ahli Bank of Kuwait (ABK), according to Al Mal. Midor plans to use the loan to finance its crude oil imports and their working capital.

Egyptian e-payments company Fawry will launch its services in UAE alongside the Dubai Islamic Bank in Q1-2020. The company also plans to expand into Saudi Arabia and Kuwaitin 2020, with a bank transfer service for Egyptians living in GCC in cooperation with National Bank of Egypt, Bank of Alexandria, Banque du Caire, and ADIB.

The New Administrative Capital Company for Urban Development (NACCUD) signed a contract with US-based Honeywell and Etisalat Misr to develop a city management system for the new capital.

Dubai AlcazarEnergy is bidding for two renewable energy tenders, one wind plant and one solar plant, in the West Nile region with a combined capacity of 450 MW. The company completed last year four solar power plants in Aswan Benban park with a combined production capacity of 200 MW.

Sports and Culture

The Public Investment Fund (PIF), Saudi Arabia sovereign-wealth fund, is in talks to buy UK Premier League soccer team Newcastle United F.C. for about 445 MM USD. The PIF is eyeing the soccer team along with a group of investors organized by British financier Amanda Staveley, the Wall Street Journal reported. A final deal could be days or weeks away.

Egypt national handball team have reached the final following their victory over Algeria in the African Men’s Handball Championship. The Pharaohs defeated Algeria 30-27 in the semi-final on Friday to advance to the final as they take a step closer towards qualification for the 2020 Olympics in Tokyo. Both sides had a strong start to the game as Egypt led the first half 15-14 before extending their lead in the second half to overcome Algeria.

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